<h1>Compensation for revenue loss sought as GST rate reform could reduce state revenues, prompting demand for a replacement mechanism.</h1> Opposition-ruled states seek a formal compensation arrangement to address projected revenue shortfalls from the Centre's proposed GST rate reform that consolidates slabs, moves many goods to lower rates, and creates a special high rate for certain demerit and luxury items. The time limited compensation cess that previously funded state compensation is ending after loan repayment, so the GST Council must decide an alternative mechanism to preserve tax incidence on demerit and ultra luxury goods and whether any additional levies will be shared with states to offset revenue losses.